By Bennie Van Rooy, CEO of Grobank
While the agriculture sector contributes just 2.5% to South Africa’s total gross domestic product, it is a sector that provides both foreign exchange and employment. This grows its contribution to around 12% of the GDP, making it important not only from a food security and export point of view, but from a human resource perspective too.
Agricultural planning must therefore include all economic activities allied to the sector. Typically, this would be financing farmers to purchase ongoing inputs, such as seeds, fertilisers, pesticides, irrigation water and more. Agricultural finance can help to make these purchases easier for farmers.
It is in understanding the farmer’s specific requirements that Grobank comes into its own. Where traditional banking looks at the financial impact first, Grobank looks at the client’s needs and how we can best support them.
It is a partnership that demands trust by all parties, as well as an understanding of current and future needs. For example, if we look at the picture painted by experts on global warming and climate change, and we review the impacts recorded over the past decade or so, we can ensure our clients have the resources available to them to deal effectively with anything from drought or floods, to fire or crop failure.
The negative impacts that farmers in sub-Saharan Africa have already seen requires not just financial input for mitigation, but a strong focus on education and the funds required for that. Every solution we determine in discussion with our clients brings an additional cost or infrastructural requirement, all of which must form part of our long-term financial strategy. Relationships between financial services and farmers need to be long-term, through the cycle and sustainable for both parties.
Presently, the risks brought on by the current drought in South Africa include a reduction in food security and increased unemployment. Food prices are on the increase, and environmental and social sustainability is fragile. There is also reduced access to credit by farmers, and an uptick in distressed bank loans. All of these issues are an integral part of our financial planning strategy.
The good news for many is a spike in the development of agritech, with technology breakthroughs promising a slew of solutions for the sector. The World Bank recently identified several trends that are transforming agriculture in Africa, including solar refrigerators that help dairy farmers reduce milk spoilage; and mobile phone apps that enable farmers to hire affordable tractors when they need them.
Reports indicate that just this simple technology is increasing farmers’ yields by up to 200%.
Agricultural innovations that assist with timing, monitoring and selling of crops for emerging and established farmers are proving valuable, and the sizeable profits that can be generated means investment in agritech should be planned for.
These include term, mortgage and production credit loans. At the moment, Grobank offers business banking loans but not necessarily production/agricultural loans. However, we have plans for customised products specific to the agricultural sector in the pipeline and will start offering these solutions to customers during 2020.
Other important banking products from Grobank include transactional accounts, investment accounts, Forex solutions, structured trade and commodity finance. We also partner with insurers on behalf of our clients, should that be necessary.
Key challenges facing the agri-finance sector now are the credit risk that are beyond anyone’s control, such as weather and volatile commodity prices. This limits capital and funding allocated by banks to the agri-sector and – with inadequate data available on environmental and socially sustainable lending – caution is key.
However, agri-focussed banks are typically increasing their collateral requirements, enhancing their environmental reporting capabilities, and reducing production risk by getting a better line of sight of the value chain. Where Grobank is different is that we take a longer term view of the sector and accept that adverse weather conditions are cyclical. This ensures both Grobank and our clients have a more robust view of risks and take these into account during financial planning.
Cookie | Duration | Description |
---|---|---|
__hssrc | session | This cookie is set by Hubspot. According to their documentation, whenever HubSpot changes the session cookie, this cookie is also set to determine if the visitor has restarted their browser. If this cookie does not exist when HubSpot manages cookies, it is considered a new session. |
cookielawinfo-checkbox-advertisement | 1 year | The cookie is set to record the user consent for the cookies in the category "Advertisement". |
cookielawinfo-checkbox-analytics | 11 months | This cookie is set to store the user consent for the cookies in the category "Analytics". |
cookielawinfo-checkbox-functional | 11 months | The cookie is set to record the user consent for the cookies in the category "Functional". |
cookielawinfo-checkbox-necessary | 11 months | This cookie is set to store the user consent for the cookies in the category "Necessary". |
cookielawinfo-checkbox-others | 11 months | This cookie is set to store the user consent for the cookies in the category "Other. |
cookielawinfo-checkbox-performance | 11 months | This cookie is set to store the user consent for the cookies in the category "Performance". |
viewed_cookie_policy | 11 months | The cookie is set to store whether or not user has consented to the use of cookies. It does not store any personal data. |
Cookie | Duration | Description |
---|---|---|
__hssc | 30 minutes | This cookie is set by HubSpot. The purpose of the cookie is to keep track of sessions. This is used to determine if HubSpot should increment the session number and timestamps in the __hstc cookie. It contains the domain, viewCount (increments each pageView in a session), and session start timestamp. |
bcookie | 2 years | This cookie is set by linkedIn. The purpose of the cookie is to enable LinkedIn functionalities on the page. |
lang | session | This cookie is used to store the language preferences of a user to serve up content in that stored language the next time user visit the website. |
lidc | 1 day | This cookie is set by LinkedIn and used for routing. |
Cookie | Duration | Description |
---|---|---|
__hstc | 1 year 24 days | This cookie is set by Hubspot and is used for tracking visitors. It contains the domain, utk, initial timestamp (first visit), last timestamp (last visit), current timestamp (this visit), and session number (increments for each subsequent session). |
_ga | 2 years | This cookie is installed by Google Analytics. The cookie is used to calculate visitor, session, campaign data and keep track of site usage for the site's analytics report. The cookies store information anonymously and assign a randomly generated number to identify unique visitors. |
_ga_7830NTLLXS | 2 years | This cookie is installed by Google Analytics. |
_ga_8FT0WQ6XG7 | 2 years | This cookie is installed by Google Analytics. |
_gat_UA-199321007-1 | 1 minute | This is a pattern type cookie set by Google Analytics, where the pattern element on the name contains the unique identity number of the account or website it relates to. It appears to be a variation of the _gat cookie which is used to limit the amount of data recorded by Google on high traffic volume websites. |
_gcl_au | 3 months | This cookie is used by Google Analytics to understand user interaction with the website. |
_gid | 1 day | This cookie is installed by Google Analytics. The cookie is used to store information of how visitors use a website and helps in creating an analytics report of how the website is doing. The data collected including the number visitors, the source where they have come from, and the pages visted in an anonymous form. |
hubspotutk | 1 year 24 days | This cookie is used by HubSpot to keep track of the visitors to the website. This cookie is passed to Hubspot on form submission and used when deduplicating contacts. |
Cookie | Duration | Description |
---|---|---|
_fbp | 3 months | This cookie is set by Facebook to deliver advertisement when they are on Facebook or a digital platform powered by Facebook advertising after visiting this website. |
bscookie | 2 years | This cookie is a browser ID cookie set by Linked share Buttons and ad tags. |
fr | 3 months | The cookie is set by Facebook to show relevant advertisments to the users and measure and improve the advertisements. The cookie also tracks the behavior of the user across the web on sites that have Facebook pixel or Facebook social plugin. |
IDE | 1 year 24 days | Used by Google DoubleClick and stores information about how the user uses the website and any other advertisement before visiting the website. This is used to present users with ads that are relevant to them according to the user profile. |
test_cookie | 15 minutes | This cookie is set by doubleclick.net. The purpose of the cookie is to determine if the user's browser supports cookies. |
VISITOR_INFO1_LIVE | 5 months 27 days | This cookie is set by Youtube. Used to track the information of the embedded YouTube videos on a website. |
YSC | session | This cookies is set by Youtube and is used to track the views of embedded videos. |
Cookie | Duration | Description |
---|---|---|
AnalyticsSyncHistory | 1 month | No description |
CONSENT | 16 years 6 months 1 day 12 hours | No description |
li_gc | 2 years | No description |
UserMatchHistory | 1 month | Linkedin - Used to track visitors on multiple websites, in order to present relevant advertisement based on the visitor's preferences. |
yt-remote-connected-devices | never | No description available. |
yt-remote-device-id | never | No description available. |